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Pakistani Economic Stress Watch

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Trikaal
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Re: Pakistani Economic Stress Watch

Postby Trikaal » 22 Jul 2017 22:59

Also, a failing Pakistan means a Pakistan locked in eternal misery to make ends meet. If it actually fails, it won't feel the frustration of trying and failing like it has been for the past decade.

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Pakistani Economic Stress Watch

Postby Peregrine » 22 Jul 2017 23:15

Peregrine wrote:Guddu Ji :
Patience my Dear Sir. Good Things come to those who wait!
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Third Dash wrote:No matter how good it will feel, can we actually afford a failed Pakistan? Unless we are contemplating military action to occupy it, I don't think India can afford an Afghanistan like state next door. Allah only knows who will have the control of nukes. Ideal scenario is a Pakistan kept on the brink. A failing Pakistan which is never actually allowed to go over the edge.
Third Dash Ji :

My thoughts exactly. I refer you to my Post of today 22 Jul 2017 @ 22:39 Hours in the "Managing Chinese Threat" Thread.
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Re: Pakistani Economic Stress Watch

Postby Guddu » 22 Jul 2017 23:26

While thats certainly one way to think, a failed pak opens up other possibilities, most importantly the break up of pak and getting back POK. In the long term, the break up of Pak into its constituent states may stabilize it., BD is a good example. It would also put an end to CPEC or any Cheeni aspirations. I for one hope that GOI is looking actively into this option.

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Re: Pakistani Economic Stress Watch

Postby Trikaal » 23 Jul 2017 03:31

Guddu wrote:While thats certainly one way to think, a failed pak opens up other possibilities, most importantly the break up of pak and getting back POK. In the long term, the break up of Pak into its constituent states may stabilize it., BD is a good example. It would also put an end to CPEC or any Cheeni aspirations. I for one hope that GOI is looking actively into this option.


Sure it's a better scenario but can India pull it off. US won't allow it as they need Pak for war against terror in Afghanistan, China won't allow it coz they need Pakistan to maintain and pay for CPEC, India won't do it because we don't have the political will.

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Re: Pakistani Economic Stress Watch

Postby yensoy » 23 Jul 2017 05:16

Operation Tetra-Pak - 4 fragments of Pakistan

US will be ok as long as they have a pliant Sindh, Baluchistan and K-P. Even Sindh may not be necessary for access to the sea since we now have Gwadar.

With Punjab being cut off from the sea, their belligerence will be scaled down hugely and they will be as powerful as say Mongolia. Unfortunately, the land borders between these fragments will be very porous for some time, allowing militant groups free access and refuge across borders. The first order of business would be to fence in Pakjab.

Regarding the influx of economic refugees fleeing Pak into India, this is what the landmines and illuminated border fence are there for.

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Re: Pakistani Economic Stress Watch

Postby Peregrine » 23 Jul 2017 23:19

yensoy wrote:Operation Tetra-Pak - 4 fragments of Pakistan

US will be ok as long as they have a pliant Sindh, Baluchistan and K-P. Even Sindh may not be necessary for access to the sea since we now have Gwadar.

With Punjab being cut off from the sea, their belligerence will be scaled down hugely and they will be as powerful as say Mongolia. Unfortunately, the land borders between these fragments will be very porous for some time, allowing militant groups free access and refuge across borders. The first order of business would be to fence in Pakjab.

Regarding the influx of economic refugees fleeing Pak into India, this is what the landmines and illuminated border fence are there for.
yensoy Ji :
Thank you indeed for addressing my main worry!

However I would Like to amend my other worry as : The first order of business would be to fence in Pakjab ALL OF CLAPISTAN NOW!

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Re: Pakistani Economic Stress Watch

Postby Kashi » 24 Jul 2017 08:26

Trikaal wrote:Sure it's a better scenario but can India pull it off. US won't allow it as they need Pak for war against terror in Afghanistan, China won't allow it coz they need Pakistan to maintain and pay for CPEC, India won't do it because we don't have the political will.


It will be difficult to pull it off for precisely the reasons you pointed out Too many vested interests in keeping Pak intact..

Moreover, do we have the ability to deal with the aftermath, the influx of "economic refugees"?

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Re: Pakistani Economic Stress Watch

Postby A_Gupta » 24 Jul 2017 16:32

A few days old, from Bloomberg.com (apologies if it has appeared already)
https://www.bloomberg.com/news/articles ... an-markets

Signs that Pakistan, home to one of the world’s top five stock markets last year, is headed for a currency devaluation is giving investors another reason to stay away from the world’s newest emerging market.

Foreign reserves are falling, the current-account deficit has more than doubled in less than a year and the benchmark KSE100 Index has lost its mojo. Now Moody’s Investors Service has joined the International Monetary Fund, which said last year the rupee is as much as 20 percent overvalued, in urging the central bank to abandon its grip on the currency and allow more flexibility.

....

“The fiscal position will continue to deteriorate, so we are setting up for a big devaluation at some point,” said Nikhil Bhatnagar, director of Asia sales at Auerbach Grayson & Co. in New York. “There will be a policy limbo until next year, until the election is done” even if the prime minister is forced to step down before that, he said.

Bhatnagar, who advises clients on stocks in Asia including Pakistan, forecasts the benchmark index will drop 20 percent in dollar terms from current levels by the end of 2018.
....
....

“The devaluation of the currency is always a very unpopular political move in Pakistan,” said Baryalay Arbab, director of equity trading at EFG Hermes in Dubai. “The bigger concern will be when, and if, a devaluation occurs, is it forced by dangerously low foreign reserves or a preemptive step by the government. The former will create a lot more havoc.”
....
....
Pakistan needs to devalue the rupee but its high level of external debt will make that “very painful” in terms of pushing up servicing costs, said Saad bin Ahmed, director of capital markets at Multiline Securities Pvt. in Karachi.

“Rupee management has become a political tool to assuage inflation concerns,” he said. “I believe devaluation will happen in one go. We don’t normally do slow and gradual depreciation.”

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Re: Pakistani Economic Stress Watch

Postby anupmisra » 26 Jul 2017 00:03

A_Gupta wrote:A few days old, from Bloomberg.com (apologies if it has appeared already)
https://www.bloomberg.com/news/articles ... an-markets

Nikhil Bhatnagar, director of Asia sales at Auerbach Grayson & Co. in New York.


A Yindoo-Amriki sazish.

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Pakistani Economic Stress Watch

Postby Peregrine » 26 Jul 2017 14:56

X Posted on STFUP Thread

Al Jumhuria Islamia Al Clapistania

2016-2017 : BALANCE OF TRADE

IN US$ - BILLIONS

EXPORTS : 21.660 - IMPORTS 48.545 - TRADE DEFICIT 26.885

Old Saying : When your Trade Deficit is more than you Exports then you are “In Heap Big SIERRA HOTEL INTERNATIONAL TANGO!

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Pakistani Economic Stress Watch

Postby Peregrine » 26 Jul 2017 15:44

X Posted on the STFUP Thread

After Further Hard Efforts of the Financial Wizards of Al Jumhuria Islamia Al Clapistania

2016-2017 : BALANCE OF TRADE IN GOODS AND SERVICES

IN US$ - BILLIONS

EXPORTS : 27.215 - IMPORTS 57,673 - TRADE IN GOODS & SERVICES DEFICIT : -30.458

Old Saying : When your Trade in Good & Services Deficit is more than you Exports of Goods and Services then is are “In Heap Big SIERRA HOTEL INTERNATIONAL TANGO!

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Pakistani Economic Stress Watch

Postby Peregrine » 31 Jul 2017 00:55

X Posted on the STFUP Thread

Badhaiyaan Ji Badhaiyaan, Nwaz Ko Badhaiyaan, Clapistan Ko Badhaiyaan, Loan Daynay Wale Ko Badhaiyaan.

Nawaz added whopping $35b to Pakistan’s debt

ISLAMABAD: Former prime minister Nawaz Sharif’s government obtained a whopping $35 billion in new loans during his four-year tenure to repay maturing debt and keep official foreign currency reserves at a level which could give a sense of economic stability to investors.

About $17 billion or nearly half of the total loans obtained from July 2013 to June 2017 were utilised to repay the previous debt, shows statistics maintained by the finance ministry. The government added net $18 billion to the country’s total external debt and liabilities – the highest amount added by any government during its tenure.

From July 2013 to June 2017, Pakistan’s total external debt grew by 30% to $79.2 billion, according to an International Monetary Fund (IMF) report. Out of this, external public debt was about $62.3 billion – also up by 28% compared with the figure four years ago, shows the IMF report.

The maximum number of loans – amounting to $10.1 billion, the highest taken out in any single year during the country’s 70-year history – was obtained during the last year of Nawaz’s government.

Starting from July 2013, with every passing year, the quantum of external debt kept growing due to the government’s inability to implement policies that could have ensured sufficient non-debt creating inflows.

The Supreme Court of Pakistan on Friday disqualified Nawaz on concealment of assets charges. Former finance minister Ishaq Dar would also have to face a reference in the accountability court over charges of a 91-time increase in his assets, which did not match his known sources of incomes.

On October 19, 2016, the director general debt at the finance ministry had informed the Senate Standing Committee on Finance that from July 2013 to June 2016, the PML-N government took $25 billion worth of fresh loans. He had said that net addition to external debt during the three-year period was $13 billion.

In 2013-14, the net increase in the external debt was roughly $3 billion. Similarly, in 2014-15, the net increase in debt was $4.42 billion, higher by 53% over the increase reported in the preceding year. There was a net addition of $5.6 billion in the country’s external debt during the fiscal year 2015-16, showing a growth of 28.2% over the increase in foreign debt in 2014-15, according to the ministry.

During the fiscal year 2016-17, the last government had borrowed $10.1 billion and out of which it returned about $5 billion loans.

The latest IMF report on Pakistan shows the country’s external debt at $79.2 billion by June 2017. It was $60.9 billion when the PML-N took the control of the government, according to the report. That means the government added $18.3 billion to the external debt.

In June 2013, the gross official reserves held by the State Bank of Pakistan stood at $6 billion, which increased to $16 billion by June 2017. The entire increase of $10 billion in the official foreign currency reserves was the result of borrowings, as during this period exports kept on declining.

The remaining $8 billion external debt was taken to meet the balance of payments requirements.

According to sources in the finance ministry, maintaining official foreign currency reserves at this level is critical to giving a perception of an economic turnaround; and the former finance minister was also very sensitive about the issues of official foreign currency reserves and rupee-dollar parity.

Dar had always presented the position of the official foreign currency reserves as an example of strong economy. He would often ignore the structural weaknesses of the economy like declining levels of savings and investments in terms of Gross Domestic Product.

The IMF’s Article-IV report shows that Pakistan’s gross external debt in terms of exports was 193.2% in 2013; and this ratio deteriorated to 294.4% as of June 2017. During this period, Pakistan’s gross external financing requirements also almost doubled to $17.2 billion from $9.1 billion.

While responding to deteriorating external sector situation, the finance ministry had said last week that “external borrowing is a routine and normal function of developing countries and Pakistan is no exception.”

It had added that developing economies resort to borrowing to meet investment requirements, accelerate growth and create jobs. External borrowing is also necessitated to retire past debt, finance essential imports, build external buffers, and shore up external reserves to maintain external account sustainability in a global context.

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Re: Pakistani Economic Stress Watch

Postby LokeshC » 31 Jul 2017 01:05

Peregrine wrote:It had added that developing economies resort to borrowing to meet investment requirements, accelerate growth and create jobs. External borrowing is also necessitated to retire past debt, finance essential imports, build external buffers, and shore up external reserves to maintain external account sustainability in a global context.


Whaaa........??!!! Are they admitting that Bakistani dekhonomoney is a gigantic ponzi scheme?

There are only two types people who take one debt to pay of the others: Scamsters or Idiots.

After some more scratching of the head: They could recycle loans, IF they negotiate a lower interest rate with the new lender, but for that their credit rating has to be good or there need to be idiot lenders who will lend them money at a lower interest rate (high risk, low rewards).

How can an economy whose production indicators is in the dumps (the only thing that can REALLY pay off a loan), recycle debt and say its "ok" and its "accountable". Just... how?

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Re: Pakistani Economic Stress Watch

Postby Peregrine » 31 Jul 2017 02:17

Peregrine wrote:It had added that developing economies resort to borrowing to meet investment requirements, accelerate growth and create jobs. External borrowing is also necessitated to retire past debt, finance essential imports, build external buffers, and shore up external reserves to maintain external account sustainability in a global context.
LokeshC wrote:Whaaa........??!!! Are they admitting that Bakistani dekhonomoney is a gigantic ponzi scheme?

There are only two types people who take one debt to pay of the others: Scamsters or Idiots.

After some more scratching of the head: They could recycle loans, IF they negotiate a lower interest rate with the new lender, but for that their credit rating has to be good or there need to be idiot lenders who will lend them money at a lower interest rate (high risk, low rewards).

How can an economy whose production indicators is in the dumps (the only thing that can REALLY pay off a loan), recycle debt and say its "ok" and its "accountable". Just... how?
LokeshC Ji :
Other than "Creative Accounting" they have no option! After all Clapistan has "No Economy"! All one can say is "Phront Phront Watching Happening Happening What?"
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Re: Pakistani Economic Stress Watch

Postby anupmisra » 31 Jul 2017 03:46

LokeshC wrote:There are only two types people who take one debt to pay of the others: Scamsters or Idiots.


Or clever people who know that declaring bankruptcy will wipe out all their debts. They can then start afresh. Circa 2008 - the US public debt situation.

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Pakistani Economic Stress Watch

Postby Peregrine » 04 Aug 2017 15:17

X Posted on the STFUP Thread

Textile City project faces the axe
ISLAMABAD: A parliamentary committee was told on Thursday that the government had decided to wind up the Pakistan Tex­tile City even though more than Rs2.5 billion had already been invested in the initiative.
“The company faces financial problems and its liabilities have swollen to nearly Rs5 billion during the last decade. The board of governors has decided to wind up the Textile City,” Kazim Hussain, Director General of Planning and Development, Port Qasim Authority, told the Senate committee on ports and shipping.
“The government has ordered the disposal of all assets of the company and the land transferred to the Port Qasim Authority, which leased 1,250 acres for the Textile City. The PQA shall be responsible for settling all liabilities of the company out of its own resources since it will have beneficial use of the land,” Mr Hussain told the committee members.
According to the official, the government owned 56 per cent shares while the Sindh government 16 per cent.
Although Rs2.5 billion has already been injected into the infrastructure, no progress could be made due to unavailability of water, gas and electricity. The issue of these basic utilities could not be settled despite our best efforts. The company’s accounts have been blocked by the National Bank due to non-payment of loans,” said Mr Hussain. The company has been suffering losses of Rs 800,000 every day.
He believed that once the company became operational, it would employ more than 32,000 people directly and indirectly.
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Re: Pakistani Economic Stress Watch

Postby Guddu » 07 Aug 2017 04:33

Guys we should start the countdown to Pak default, I am betting within 3 years !. Currently, its world number 4 and it has the following parameters. If someone has access to latest Pak CDS rates, pl. post.
4: Pakistan

Cumulative Probability of Default: 39.0%

Current 5-year Mid CDS (bps): 719.0 meaning it costs $719,000 a year for five years to insure $10 million of sovereign debt. Its usually curtains once this number goes over 1000 bps

CMA Implied Rating (June 29): b

CMA Implied Rating (Q1): b-

Source: CMA Datavision

And then there is this: Same story different picture

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Re: Pakistani Economic Stress Watch

Postby chanakyaa » 07 Aug 2017 23:06

Current CDS spread is 280 bps, compared to 423 bps in the middle of 2016. Unfortunately, the spread has come down :x

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Pakistani Economic Stress Watch

Postby Peregrine » 08 Aug 2017 23:23

chanakyaa wrote:Current CDS spread is 280 bps, compared to 423 bps in the middle of 2016. Unfortunately, the spread has come down :x
chanakyaa Ji :

Please don't despair. In a few years Clapistan will drowning under the "Humbantota" Effect and be fully surrounded - fenced in - besieged under the Auspices of the CPEC Game Changer "Venezuela II" Effect.

Phir Ayegaa Muza!

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Re: Pakistani Economic Stress Watch

Postby Atmavik » 08 Aug 2017 23:57

chanakyaa wrote:Current CDS spread is 280 bps, compared to 423 bps in the middle of 2016. Unfortunately, the spread has come down :x


you need to add a large error factor pertaining to Sialkot Statistics. no of Paki RAPE's are talking abt Greece and Venezuela this should give us a hint. :wink:

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Re: Pakistani Economic Stress Watch

Postby ArjunPandit » 09 Aug 2017 00:04

I can bet money on it that porkis wont default, they will be taken over by chicoms by then

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Re: Pakistani Economic Stress Watch

Postby Prem » 11 Aug 2017 03:37

https://tribune.com.pk/story/1478379/fo ... -39b-2-03/
Foreign exchange: SBP's reserves drop to $14.39b, down 2.03%

KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to decline for the fourth consecutive week, falling 2.03% on a weekly basis, according to data released by the central bank on Thursday.On August 4, the foreign currency reserves held by the central bank were recorded at $14,398.8 million, down $299.4 million or 2.03%, compared to $14,698.2 million in the previous week, according to the central bank.Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,003.7 million. Net reserves held by banks amounted to $5,604.9 million.A month ago, foreign currency reserves increased due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.Earlier, the SBP received $350 million under the Coalition Support Fund (CSF) and made payments of $62 million for external debt servicing.In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.

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Pakistani Economic Stress Watch

Postby Peregrine » 11 Aug 2017 14:40

X Posted on the STFUP Thread

The myth of economic progress
One myth that is paraded as a fact is that military rule has always ushered in an era of progress and prosperity for the country. The latest statement of the myth has been put forward by the former military ruler General (r) Pervez Musharraf.
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Pakistani Economic Stress Watch

Postby Peregrine » 11 Aug 2017 16:32

X Posted on the STFUP Thread

WB links loans to liberal foreign exchange policy

ISLAMABAD: The World Bank has turned down Pakistan’s request for policy loans to cushion its dwindling foreign currency reserves and asked Islamabad to first depreciate the rupee before knocking the door for a bailout. Ilon Blothel will come to the Lescue!

The government has been facing a dilemma because the foreign exchange reserves have been falling despite continued borrowing from the international market. During the past 11 months alone the reserves have depleted by $4.2 billion.

“Due to deteriorating macroeconomic conditions of Pakistan, the lending agency cannot extend policy loans for budgetary and balance of payments support at this time,” said sources in the World Bank.

“The Washington-based lender has linked the future policy loans to a liberal foreign exchange policy,” said the sources.

They said the day the government decided to liberalise the foreign exchange policy, the bank would give the policy loan. The decision will not affect the lending for projects that has already been sanctioned.

The bank’s condition has put Finance Minister Ishaq Dar in a tight spot because he is a staunch believer in a strong rupee against the US dollar. Last month he changed the acting State Bank of Pakistan governor within 24 hours after the rupee was allowed to depreciate by 3.1% against the US dollar.

Under the current macroeconomic conditions, specially the foreign exchange policy and a rising circular debt in the power sector, the bank will not be able to provide a bailout in the shape of budgetary support, said the sources.

“It is still not too late to revise the foreign exchange regime in a manner that is conducive for boosting the exports and help cover current account deficit,” they added.

The sources said the bank has informed the Q Block – the seat of the Ministry of Finance – that the policy loans can only be provided if the government brings those corrective changes.

“The negotiations for a policy loan are underway and the World Bank does not officially communicate us about its any decision to link the loan with the depreciation of the rupee,” said an official of the finance ministry.

He said it was not the mandate of the World Bank to make such a demand. The Ministry of Finance did not officially give a version on the story.

The rupee is traded at 105.3 to a dollar in the interbank market which, according to the IMF, is overvalued by at least 10%.

Usually, the bank’s policy loans range between $300 million and $600 million that are immediately disbursed after its approval by the Board of Directors.

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Pakistani Economic Stress Watch

Postby Peregrine » 15 Aug 2017 22:10

X Posted on the STFUP Thread

PSX bears full brunt of uncertainty as benchmark index slides 1,389 points

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The Pakistan Stock Exchange (PSX) saw a bloodbath on Tuesday, with the benchmark KSE-100 Index losing 1,389 points.

The benchmark index plunged 3.07 per cent, falling through the 44,000 level to close at 43,899 points. The market touched the day's high at 45,419 as the benchmark showed some positive movement in the first few minutes, but failed to sustain the momentum.

The benchmark recorded a day's low of 43,822 points near the close of the trading session.

The banking sector led activity at the bourse, with 31.3 million shares traded, followed by the chemical and the engineering sectors with 19 and 15.5 million shares, respectively.

A JS Global report attributed the sharp decline in the KSE-100 index level to the political uncertainty and selling pressure from foreign investors.

"OGDC (-3.95pc), ENGRO (-4.28pc), HBL (-1.76pc), MCB (-3.54pc) and HUBC (-3.35pc) were among major laggards that dragged the index down," said the report.

"SSGC (-5pc) hit its lower lock on the back of news regarding OGRA cutting rate for Sui Southern gas by Rs10 per unit. ISL (-4.24pc) closed near its lower circuit. The company announced its year-end results posting an EPS of Rs7 and a final cash dividend of Rs3.50," it said, adding that the oil and gas exploration and production (E&P) sector closed in the negative zone as oil prices slid for a second session, plumbing fresh three-week lows on a stronger dollar and concerns over a global supply glut.

According to the report, PPL (-2.93pc), POL (-2.04pc) and OGDC (-3.95pc) were among the losers from the aforementioned sector. PSO (-2.23pc), SSGC (-5pc) and SNGP (-5pc) from the oil marketing companies sector also witnessed selling pressure in the sinking market despite positive news for the sector where the Economic Coordination Committee is expected to consider increasing profit margins of oil marketing companies and dealers through prices of petroleum products.

MLCF (-4.14pc) from the cement sector released material information which stated an announcement of 12.50pc rights share issue at a price of Rs65/share for its grey clinker production, it added.

Ahsan Mehanti of Arif Habib Corporation said that the stocks closed bearish after reports emerged that the former premier would file an appeal, pleading the Supreme Court to dismiss the Panama Papers verdict.

"Foreign outflows, falling global crude prices, concerns for $3.2bn dismal trade deficit data for Jul'17 and pending circular debt in energy sector played a catalyst role in bearish close at the PSX," he said.

A total of 85.4m shares of KSE-100 companies changed hands during the session, with a total worth of nearly Rs6.9 billion.

Stocks of 379 companies in all were traded on the exchange, of which only 39 gained in value, whereas 326 declined and 14 remained unchanged.

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Pakistani Economic Stress Watch

Postby Peregrine » 16 Aug 2017 21:43

X Posted on the STFUP Thread

Pakistan may soon be ineligible for World Bank loans

ISLAMABAD: In an emerging development, Pakistan may soon become ineligible for financial assistance from one of the two main arms of the World Bank Group – the International Bank for Reconstruction and Development (IBRD), as the country’s official foreign currency reserves are rapidly getting slimmer.

One of the key conditions for qualifying for IBRD loans is that the loan-seeking country should have official foreign currency reserves equivalent to three months of import bill.

Pakistan was touching that border line as its reserves stood at $14.3 billion on August 4, 2017.

These reserves include $3.9 billion in short-term borrowings by the central bank. By excluding the short-term forward contracts, the State Bank of Pakistan’s (SBP) net reserves will come down to $10.4 billion, according to the central bank data.

Sources in a multilateral lending agency and the Ministry of Finance told The Express Tribune that gross foreign currency reserves may slip below the threshold of three-month import cover either in the last week of August or the first week of September.

In order to rein in the declining reserves, the Ministry of Finance will have to immediately look for ways to ramp up the critical pool of foreign currency. Since the end of the International Monetary Fund’s (IMF) assistance programme 11 months ago, Pakistan’s official foreign currency reserves have dropped $4.2 billion.

Responding to the development, a spokesman for the Ministry of Finance said the SBP’s reserves totalled $14.398 billion on August 4, 2017, which were adequate for 3.2 months of imports.

He pointed out that an export package of Rs180 billion and improved global economic outlook had caused about 10.5% increase in exports in July 2017 compared to the same month of previous year. Apart from this, remittances from overseas Pakistanis have shown a healthy growth of 16% in July 2017.

As exports and remittances returned to the growth zone, the spokesman said, the government expected a significant increase in foreign direct investment and other inflows including official ones.

“With increased inflows together with expected reduction in non-essential imports due to the imposition of regulatory duty in the Finance Bill 2017, the SBP reserves are expected to strengthen in coming months,” he said.

Furthermore, the government was also working on more measures, which would be rolled out after finalisation, said the spokesman.

Ministry sources revealed that the government was reviewing different options to keep the reserves above the three-month import bill. These included incentives for expatriates to invest in Pakistani dollar-denominated bonds, more restrictions on imports and steps that will encourage exporters to bring back export proceeds.

The last three-month (May-July) import bill of Pakistan stood at $14.5 billion, showed the data compiled by the Pakistan Bureau of Statistics.

In the previous fiscal year, Pakistan’s total imports swelled to a record $53 billion and keeping that in view, the three-month average imports came in at $13.3 billion.

The IBRD lending had been stopped for most of the tenure of the previous PPP government and the World Bank Group restored it less than two years ago. The IBRD suspension carries implications for both project and programme financing.

The IBRD financing is relatively expensive and is usually linked with changes in the recipient country’s economic and financial policies.

The World Bank Group comprises five institutions. Its two arms – the IBRD and International Development Association (IDA) – give loans to governments.

The IBRD offers loans for projects, programmes or policy purpose as well as hedging products to help manage the currency and interest rate risk exposures.

IDA is a concessionary lending window that extends funds to the poorest developing countries.

In case, Pakistan is disqualified, its borrowing from the World Bank Group will be limited to the IDA, from where it can borrow only according to the quota.

Pakistan is among the few countries that qualify for both the IDA and IBRD assistance due to its creditworthiness.

Sources said if the World Bank stopped Pakistan from IBRD borrowing, it would also have implications for the country’s creditworthiness. Lenders define creditworthiness as “the ability to service new external debt at market interest rates over the long term”.

The World Bank has already declined to give policy loans to Pakistan until it depreciates the rupee against the US dollar. The bank’s decision reflected deterioration in the country’s external sector that was posing challenges to macroeconomic stability.

However, the Ministry of Finance insisted that dialogue with the bank for policy lending was under way and the exchange rate policy did not fall within the bank’s domain.

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Re: Pakistani Economic Stress Watch

Postby anupmisra » 16 Aug 2017 22:55

Pakistan's Foreign Reserves Will be Run out of With in three Month
:((


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Re: Pakistani Economic Stress Watch

Postby DrRatnadip » 19 Aug 2017 14:07

xxxhttps://www.dawn.com/news/1352353

Karachi ranked among worst cities of the world to live in

Karachi has been named among the least liveable cities of the world by the Economist Intelligence Unit (EIU) — the research and analysis division of The Economist Group — in a report released earlier this week.

Karachi maintains its 134th rank in the listing of 140 cities, only managing to fare better than Port Moresby, Dhaka, Tripoli, Lagos
and Damascus

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Re: Pakistani Economic Stress Watch

Postby Falijee » 21 Aug 2017 00:16

CROSS POSTED FROM STUFP
Bakis To Go Begging For Euro Bonds :roll:

Govt to raise up to $1bn through eurobond
Shahid Iqbal


KARACHI: The government is planning to raise $500 million to $1 billion by floating eurobond in the international debt market, sources in the financial sector said on Saturday. The government has consulted international banks to assess the likely market response. However, preparations for launching the eurobond are at an initial stage, the sources said. Recently, Iraq launched its first independent bond worth $1bn, which was oversubscribed by seven times, reflecting demand for bonds in the debt market. This "joker reporter" is comparing Iraq- with its massive oil revenue (and reserves!) with Bhooka Nanga Pakistan, swimming in debt :lol:
Pakistan has a good track record of borrowing from the international market as it has never defaulted. Pakistan should follow the advice of the late Gen Hamid Gul - who had one time suggested that Pakistan has no obligation to repay all this foreign debt. One easy way of getting out of trouble. And become an International (Economic onlee !) Pariah at the same time . (killing 2 birds with 1 stone kind of a thing !) :mrgreen:
However, the country had a bad experience in September 2015 when it issued a 10-year international bond of $500m. Its rate of return was considerably high at 8.25pc. The government faced criticism over the launch of an expensive bond. But the Ministry of Finance said the economic downturn in China and uncertainty created by the Federal Reserve’s decision at the time forced Pakistan to restrict borrowing to just $500m. Now the latest Iraqi experience indicates that even the war-torn country can raise money at 6.75pc rate of return through the bond that will mature in 2023.
With a deepening political crisis, Pakistan’s financial position is getting weak, especially on the external front. Record trade and current account deficits, falling remittances, declining manpower exports and a steep slide in foreign exchange reserves are posing a challenge to the government. Experts in the financial sector said the bond launch should have already taken place since the country’s ability to hold foreign exchange reserves equal to three months of imports is eroding fast. The State Bank of Pakistan’s reserves amounted to $14.31bn on Aug 11, slightly higher than the value of three months of imports. Reserves of the central bank have been falling since October. They are down by $4.6bn in about nine months. Beggars cannot be choosers .!!! The "cruelty of the market" will manifest itself when the Aam Abduls will have to swallow the "bitter medicine" ( high gas and electricity, devaluation of currency, less social spending , higher food prices, more tax levies ) that will be prescribed by the international lenders, who in essence will be "sticking their neck out" - once more , for this international basket case :mrgreen:
If the reserves slide further, the country will find it difficult to get loans from international lenders at low interest rates. In October 2016, Pakistan issued five-year sukuk of $1bn, which attracted $2.4bn investment. The yield on the paper was of 5.5pc. The country borrowed $4.36bn loans from foreign commercial banks in 2016-17. The Economic Affairs Division reported that the country provisionally received $10.55bn foreign assistance from multilateral and bilateral donors.
. This kind of (bad economic ) news has now become a "regular feature" of the Paki Media Scene " :twisted:

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Re: Pakistani Economic Stress Watch

Postby anupmisra » 22 Aug 2017 17:16

Pakistan stocks stumble on Trump’s warning
Posting in full.

In a widely reported policy speech, Mr Trump warned Pakistan to stop acting as a “safe haven” for Afghan Taliban militants who attack US and Afghan troops in Afghanistan. “We have been paying Pakistan billions and billions of dollars, at the same time they are housing the very terrorists that we are fighting. But that will have to change” he said.

Shuja Rizvi, an equity analyst in Karachi, said: “The main impetus for today’s selling is president Trump’s speech. Investors are very worried about its implications for the future of Pakistan.”

A leading equity investor added: “There is now a much bigger danger of the US and Pakistan being on a collision course. That will have serious implications for Pakistan’s security, politics and the economy”.

However, a senior government official in Islamabad told the FT that the immediate reaction was “overblown”. He said: “The US and Pakistan have been close allies since 9/11. We have a range of communication channels and together we will try to resolve this situation”.


https://www.ft.com/content/89b57c71-e1e ... 38ed6066de

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Pakistani Economic Stress Watch

Postby Peregrine » 23 Aug 2017 20:12

X Posted on the STFUP Thread

Pakistan on the verge of seeking IMF bailout, experts claim

KARACHI: Pakistan’s economy is once again fading due to endemic issues on the external front including a high current account deficit (CAD) that has ballooned three times to $2.05 billion in the single month of July 2017 year-on-year.

The widening deficit is fast eating up foreign exchange reserves and the time may not be far when economic managers of the country shall be negotiating a new bailout package with the International Monetary Fund (IMF) if the situation persists.

The fault-line in the economy, CAD, has badly shaken the Pakistan Stock Exchange (PSX) – a barometer which reflects economic performance on a day-to-day basis.

Many seasoned economists and analysts strongly believe devaluation of the overvalued rupee against the dollar and other major world currencies is one workable solution to containing the deficit.

On different occasions during 2016, the IMF said Pakistan’s currency is overvalued by as much as 20%.

Dollar trading closed at Rs105.36 per dollar in the interbank market on Tuesday, according to the State Bank of Pakistan (SBP).

A chief operating officer (COO) of a leading asset management company said devaluation of the rupee should be decided at the earliest since procrastinating would allow the rupee to get more overvalued with the subsequent depreciation being equally severe.

There is a sense in the market that the government will sooner or later devalue the currency. This perception has caused imports to increase with traders stocking up on imported items to safeguard themselves in the event of rupee devaluation, which would make the former more expensive to buy.

Increased imports due to this perception are further widening the CAD.

“In my opinion, 7%-8% devaluation in real term would be enough and it should be done in one-go instead of doing it gradually,” the COO said.

Mirroring similar views, a former governor of SBP said the much-needed initiative would prove to be a short-term solution. He stressed on increasing value-added exports as well since the purpose of devaluing the currency is to make exports cheaper (hence attractive) and imports expensive (hence less desirable).

“4-5% devaluation is the immediate solution,”Arif Habib Limited Head of Research Shahbaz Ashraf opined, adding that this will address foreign investors’ concerns at the PSX and allow them to stop selling and start buying.

“This may attract a few hundred million dollars in Pakistan and partially finance CAD,” he claimed.

Topline Securities lists devaluation, regulatory duty on non-essential imports, export promotion, dollar bonds and bilateral borrowing as short-term measures for stabilising the economy.

Pakistan returning to IMF?

Economist Dr Ashfaque Hasan Khan foresees the widening CAD to be creating a serious balance of payments crisis for Pakistan by March-April 2018 forcing the government to re-negotiating a bailout package with the IMF by that time.

He estimates CAD to be around $16-16.5 billion during fiscal year 2017-18 with another $7-7.5 billion needed for debt servicing, taking the total amount of foreign exchange required to $24 billion in FY18.

On the contrary, he estimates Pakistan’s receivables to amount to $12.5 billion from several sources including the World Bank, Islamic Development Bank, Asian Development Bank, AIIB, bilateral grants, Chinese financing and Foreign Direct Investments, he said. “The finance minister should be asked how and who will fill the financing gap while reserves are drying up,” he remarked.

He deplored that the current government’s preoccupation with politicking will leave Pakistan with no other option than to go to the IMF.

KSE CHART FOR JUNE, JULY + AUGUST 2017 :

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Re: Pakistani Economic Stress Watch

Postby Prem » 27 Aug 2017 07:56


anupmisra
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Re: Pakistani Economic Stress Watch

Postby anupmisra » 27 Aug 2017 17:27

This hilla-ley dude seems to be an expert on every thing - defence, economy, politics...shows up on every discussion. What's his day job?

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Re: Pakistani Economic Stress Watch

Postby Bart S » 27 Aug 2017 17:45

anupmisra wrote:This hilla-ley dude seems to be an expert on every thing - defence, economy, politics...shows up on every discussion. What's his day job?


Not just him but a whole horde of retired army persons and others who are ready to spout the ISPR lines. This is their day job. The only country where lifafa journalism is not an aberration but the accepted norm. Anybody who deviates too much from the Army/ISI's POV is shut down immediately, via the anchor talking over them or cutting to break, and probably won't get invited on TV again.

Ezaz Haider once did a live show where one of his guests outed Zahid Hamid as being on the ISI payroll, and he immediately went red in the face and shut it down, given that the ISI are his paymasters too.

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Pakistani Economic Stress Watch

Postby Peregrine » 29 Aug 2017 20:08

X Posted on the STFUP Thread

PSX plummets to fresh year’s low

KARACHI - Pakistan Stock Exchange (PSX) kicked off new trading week in the red zone as the benchmark KSE 100-index fell to fresh 2017 low. The index shed 668 points and closed at 41,974 points.

The market opened on a negative note and continued to decline throughout the day, brokers said.

The day started with news about HBL (-5.0%), as the State Department of Financial Services sent a notice to HBL seeking imposition of a penalty of up to $630m, much higher than street expectations. The bank has also decided to close its New York operations, stated analyst at JS Global. This action is with regards to significant breakdowns of risk management and compliance identified in the bank's New York branch in 2015.

Top 10 index point decliners were HBL (down 5%), UBL (3.4%), MARI (5%), ENGRO (2.3%), PPL (1.5%), MTL (5%), DAWH (2.7%), DGKC (3%), MCB (1%) & LUCK (down 1.7%); withholding 427 points.

On the sector front, banks took away 277 points as HBL’s sentiment weighed on other big banks, E&Ps shed 72 points as oil prices are expected to weaken in lieu of Hurricane Harvey disrupting US Gulf refining demand, & cements dented 70 points on price concerns, said analyst Adnan Sami Sheikh at Topline Securities.

Participation was minimal as volumes receded 42% to 103m shares while traded value fell 39% to Rs5.7b/$54m.

Scrips of total 377 active companies traded in the session of which 266 closed in red, 86 in green while 25 remained unchanged.

Market participants expect the bearish spell might continue as weak results of banks, cement and fertilizers have left investors disappointed.

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Re: Pakistani Economic Stress Watch

Postby Atmavik » 29 Aug 2017 21:34

anupmisra wrote:This hilla-ley dude seems to be an expert on every thing - defence, economy, politics...shows up on every discussion. What's his day job?


Retired babu. Was in their FO

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Re: Pakistani Economic Stress Watch

Postby nam » 29 Aug 2017 21:52

Peregrine wrote:X Posted on the STFUP Thread

Pakistan on the verge of seeking IMF bailout, experts claim


Weren't this lot boasting couple of months about being the fastest growing Muslim economy?

Took them 2 months to turn turtle.

We need someone worthy to fight this 1000 year war. These jokers don't seem to take it seriously.

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Pakistani Economic Stress Watch

Postby Peregrine » 01 Sep 2017 16:18

nam wrote:Weren't this lot boasting couple of months about being the fastest growing Muslim economy?

Took them 2 months to turn turtle.

We need someone worthy to fight this 1000 year war. These jokers don't seem to take it seriously.
nam Ji :

Sorry Sir Ji, but the Clapistanis took Three Days to reply! :rotfl:

X Posted on the STFUP Thread

Bhookha Nanga decides to launch $1 bn Sukuk Bond after Eid

Govt decides to launch $1 bn Sukuk Bond after Eid

I SLAM A BAD : In a bid to bridge the financing gap on external accounts, the government has decided to kick-start the process for launching around $1 billion Sukuk Bond after Eidul Azha and the upcoming transaction will be accomplished by end October or early November this year, The News has learnt.
“The pre-launch process for international bond will start after Eid and issue timing will be decided in accordance with market conditions, ample appetite and advice of joint leader managers,” Federal Minister for Finance Ishaq Dar confirmed when The News sought his comments on Thursday.
Pakistan’s total liquid foreign reserves held by the country stood at $20.001 billion on 25th August, 2017. The foreign reserve held by the State Bank of Pakistan was $14.343 billion and foreign currency held by the commercial banks stood at $5.657 billion, totaling the reserves up to $20.001 billion.
During the week ending 25th August, 2017, SBP’s reserves decreased by $32 million to $14,343 million due to payments on account of external debt servicing.
In order to shore up foreign reserves and bridging the financing gap on external account, the government is exploring all its options including relying upon non-debt creating inflows as well as debt inflows for avoiding depletion of reserves in months and years ahead. Pakistan’s current account deficit touched new heights and stood at over $12 billion for last fiscal year 2016-17. The government had projected to curtail the current account deficit at $10 billion but it rose sharply and stood at $2 billion for first month (July 2017)
The execution of this plan for increasing dwindling reserves is the dire need of the hour otherwise it is written on the wall that Islamabad will have to again knock at the door of the IMF anytime in 2018. It is yet to see how the politically weak government which is making last ditch efforts for its survival will be able to steer the economy out of abyss for short to medium term period in months and years ahead
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Re: Pakistani Economic Stress Watch

Postby arun » 08 Sep 2017 15:07

A real Honour and Dignity aka H&D nightmare for the Mohammadden Terrorism fomenting Islamic Republic of Pakistan.

Bangladesh which separated from the Mohammadden Terrorism fomenting Islamic Republic of Pakistan in 1971 with our help overtakes the Islamic Republic in per capita GDP at Market Exchange Rates per the Economist:

Bangladesh’s GDP per person is now higher than Pakistan’s
At market exchanges rates, at least

Print edition | Asia
Sep 7th 2017

WHEN Bangladesh won independence from Pakistan in 1971, it was much poorer than the country it left. Industry accounted for only 6-7% of its GDP, compared with over 20% in Pakistan. The battle for independence had killed or displaced millions, damaged roads and railways, and severed ties with Pakistan’s bankers and industrialists (including the owner of one of the world’s biggest jute mills). Even before the war, Bangladesh had been trampled by another apocalyptic horseman: a cyclone killed hundreds of thousands in 1970. The country’s independence leader, Sheikh Mujibur Rahman, complained that West Pakistan had not promptly shared its bumper wheat crop or “given a yard of cloth for our shrouds”.

Last month revealed a remarkable turnaround. Bangladesh’s GDP per person is now higher than Pakistan’s. Converted into dollars at market exchange rates, it was $1,538 in the past fiscal year (which ended on June 30th). Pakistan’s was about $1,470.

Strange as it may sound, Bangladesh jumped ahead because of an advance in Pakistan. On August 25th Pakistan released the results of its census, updating earlier population estimates. They showed that the country has 207.8m people, more than 9m more than previously thought. It may now have the fifth biggest population in the world, surpassing Brazil’s. But the new count also lopped 4-5% off Pakistan’s GDP per person, the arithmetic consequence of revealing so many more people.

A caveat should be noted. A dollar stretches further in Pakistan than in Bangladesh because prices in the former tend to be lower. So Pakistan’s $1,470 per person actually has more purchasing power than Bangladesh’s $1,538.

This is nonetheless a good moment to celebrate Bangladesh’s economic progress. Its annual growth has averaged more than 6% over the past ten years and has run above 7% over the past two. Industry accounts for 29% of its GDP. A country that once lacked cloth for shrouds now exports more ready-made garments than India and Pakistan combined. Working conditions are still far worse than they should be. They are also far better than they once were.

Bangladesh’s GDP per person received a boost from another source. Its last census, in 2011, led to a large revision of the country’s population, larger even than Pakistan’s. But in Bangladesh’s case, the revision was downwards.


The Economist:

Bangladesh’s GDP per person is now higher than Pakistan’s : At market exchanges rates, at least

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Pakistani Economic Stress Watch

Postby Peregrine » 09 Sep 2017 13:19

X Posted on the STFUP Thread

Pakistan gets $230m loans to cushion forex reserves

ISLAMABAD: Pakistan has received two short-term loans worth $230 million from international creditors, meant to keep the official foreign exchange reserves at a level sufficient to provide cover to three-month import bill.

According to officials, the country received an amount of $153 million from Citibank in August. Besides, Islamic Development Bank (IDB) gave a $77 million short-term loan in July for crude oil import.

The IDB’s short-term facility is meant for import of crude oil from Saudi Arabia and the lender directly makes payments to the oil supplier on behalf of an oil importer. It partially helped lower pressure on the country’s forex reserves.

From April to May this year, Pakistan had signed three separate short-term loan agreements with the IDB valuing $700 million. Of this amount, Pakistan has already imported crude oil equivalent to $340 million.

For the current fiscal year, the government has estimated receiving $1.55 billion short-term loan from the IDB against the oil import facility.

Pakistan may soon be ineligible for World Bank loans

Sources in the State Bank of Pakistan (SBP) said higher than anticipated foreign remittances in August also helped keep the official foreign currency reserves above the three-month import cover level.

They said that in August, Pakistan received around $2 billion in foreign remittances, partly because of the seasonal effect of Eidul Azha.

The SBP is expected to officially announce the foreign remittances statistics next week.

During the week ending August 31, 2017, the SBP’s reserves increased by $338 million to $14.681 billion due to official inflows, the central bank had reported on Thursday.

For almost one month, Pakistan was touching the three-month import cover border line as its reserves remained at around $14.3 billion.

In order to avoid downgrading in its credit ratings and keep the tap of budget financing open from the World Bank, Pakistan has to maintain its official foreign currency reserves above the three-month import cover level.

The finance ministry is currently making arrangements for floating about $1 billion worth of Sukuk Bonds by middle of November and a better credit rating will help lower the cost of borrowing. It had also raised $1 billion last year at 5.5% interest rate – the lowest rate on the Islamic bond that it ever paid.

The government was reviewing different options to keep the reserves above the level of three-month import bill. The options included incentives for expatriates to invest in Pakistani dollar-denominated bonds, more restrictions on imports and steps that will encourage exporters to bring back export proceeds.

Finance Minister Ishaq Dar on Friday held a meeting with his Chinese counterpart Xiao Jie and discussed issues of mutual interests – including ways and means to further enhance bilateral economic relations.

During FY2016-17, Pakistan had borrowed a record $10.1 billion external loans that included a record-breaking $4.4 billion short-term financing.

Out of this, $2.3 billion came from Chinese financial institutions. The government took $1.7 billion from the China Development Bank, $300 million from the Industrial and Commercial Bank of China, and $300 million from the Bank of China.

It also obtained $445 million from the Noor Bank of the UAE, $650 million from a consortium of the Suisse Bank, the UBL and the ABL, $275 million from Citi and $700 million from the Standard Chartered Bank, London.

This was the first time in Pakistan’s history that any government has taken over $10 billion as fresh foreign loans in a single year.

Pakistan Tahreek-e-Insaf Chairman Imran Khan on Thursday called Finance Minister Ishaq Dar Pakistan’s economic hitman while criticising his economic policies.

In July, Pakistan obtained a total of $254.9 million loans, including $77 million from IDB. It received $75 million from the World Bank for project financing.

China also gave $71.5 million worth of loans for carrying out various Beijing-funded schemes. The Asian Development Bank provided $28.8 million worth of loans.

The $254.9 million loans were 3.2% of the total annual budgetary estimates of $8 billion for FY2017-18.

Comments : Awaiting further news of Clapistan’s voyage into “Further Begging for Debts” with its Kashkol!

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